10.1 WORK TEAMS
10.1.1 Work Team Concept. In recent years some contractors have diverged from the classical functional organisation philosophy and have established "work teams" or "cells". These work teams are typically assigned responsibility for the design and development of a specific deliverable or portion thereof and consequently tend to be aligned with the CWBS. Membership within any particular team may fluctuate over time as various skills (engineering disciplines) are required during the development of the product.

10.1.2 Criteria and the Work Team. The concept is not contrary to the Criteria but the Criteria do not specifically address how a contractor should organise his internal resources. The work team concept presents some challenges with regard to interpreting the Criteria's requirements. The following paragraphs, drawn from USA experience, are structured to sequentially address each Criteria category and provide guidance to contractors who wish to employ the work team concept and to assist Review Team members in evaluating a contractor's implementation of the Criteria in a work team environment.

10.1.3 Organisation. Size (dollar value, length, etc.) of cost accounts will continue to be used as one of the measures of the appropriateness of the level to which the contractual effort will be subdivided. This assures that the proper level of work breakdown has been achieved. A natural fallout of the work team concept may be the overall reduction in the number of cost accounts with a resultant increase in their size, duration and resource composition. This will result from grouping organisation elements, CWBS elements or a combination of both into larger, higher level cost accounts.

10.1.4 The basic nature of work packages (size, duration, resource composition) will not change. However, the number of work packages per cost account may increase. Work packages should be used to segregate different tasks, different resources, different functions.

10.1.5 Mixing of discrete effort and LOE tasks should be kept to a minimum to help ensure that performance on discrete tasks is not distorted. Because the cost account work content in a work team environment may tend to be larger than would otherwise be so, the determination as to whether or not LOE and discrete effort may be commingled should be based on a consideration of both dollar value and ratio of LOE to total cost account value.

10.1.6 In multi-functional/discipline work teams, data collection must be at a level which will permit LOE to be adequately separated from discrete effort. It may be necessary for data segregation of LOE and discrete effort to be accomplished at the level of labour rate application codes, such as department or labour category. Contractor procedures should clearly demonstrate that the separation of LOE and discrete effort provides valid performance measurement and reporting.

10.1.7 To ensure the proper resources are available to perform the cost account effort, cost account responsibility has traditionally been assigned to a functional manager with line authority over those performing the work. Since the preponderance of the effort in the cost account which is created in a work team environment is by its nature multi-functional, functional lines will inevitably be crossed. Even though the amount of multi-organisational effort is substantial in a work team environment, the work team concept centres around the precept that work authority will now shift from the functional organisation to the work team organisation. The work team manager will have authority over and managerial involvement with those performing the work.

10.1.8 Under a work team approach, the amount of multi-organisational work within a cost account is of less concern. Emphasis should be placed on the methods which are in place to authorise, monitor, assess and report performance measurement. It is not necessary for a work team member to report full-time to one work team leader.

10.1.9 Planning and Budgeting. In non-work team circumstances, it is practical to develop labour budgets based on direct labour rates at the cost account level. When work team cost accounts contain multi-organisational activity, labour rates must be applied below the cost account level. To ensure that the appropriate direct labour rates are applied to each activity, labour rates should be applied at the labour rate application code level selected by a contractor.

10.1.10 Accounting. After indirect costs are accumulated and allocated to contracts, they are applied at the level selected by the contractor. If the contractor elects to distribute indirect costs to cost accounts, then, when work team cost accounts contain multi-organisational activity, indirect costs must be applied below the cost account level. Whether or not the overhead costs are displayed at this level, the capability must exist to apply them to the appropriate base.

10.1.11 Analysis. The two components of any labour cost variance are rate variance and efficiency variance. In a work team environment, the contractor must demonstrate that these labour cost variance components are visible within the cost account. Accordingly, labour rate variances must be visible to the appropriate manager at the labour rate application level. Each affected Cost Account Manager on the program utilising that type of functional resource should assess this labour rate variance impact on each affected cost account. Labour efficiency variance analysis should be performed by each Cost Account Manager.

10.2 COST PERFORMANCE REPORTING

10.2.1 Under the work team concept contractors may structure and display their organisations in a number of different ways: as a functional organisation; as an autonomous program organisation; or as a matrix program organisation. Although the traditional definitions of functional organisations are engineering, manufacturing, etc., the term "organisational or functional category" on CPR Format 2 may, if acceptable to the Project Authority, include responsible or performing organisation.

10.2.2 The organisational or functional categories reflected on Format 4 of the CPR should coincide with those shown on Format 2 of the report. Further, equivalent man-months, man-weeks, man-days or man-hours should be indicated for the current reporting period, cumulative through the current period, and forecast to completion.

10.2.3 Depending upon the organisational structure reflected by the contractor operating under the work team concept, the required entries on Format 4 could be different from those that may be reflected on Format 2. In order to avoid misunderstandings, Format 4 reporting should be resolved during the negotiation phase. The contractor may find it necessary to report manpower requirements and usage to a different structure than the one established for management purposes. However, this is not perceived as a hardship on the contractor, since it requires the same insight into the time-phased labour rate application code/skill requirements as for internal management purposes, eg, application of overheads, resource management, rate impacts, facility requirements, etc.